How a two-store Chicago boutique handles e-commerce growth

Merz Apothecary, a two-store retailer of health and beauty products founded in 1875, has enough charm in its old-Europe-style boutiques to attract busloads of tourists in Chicago, president Anthony Qaiyum says. It also gets rushes of customers on its 15-year-old e-commerce site, Smallflower.com, he adds, for hard-to-find products like $200 Dovo straight razors with wooden handles and $6.50 bars of Vinolia soap, billed as “the official soap of the Titanic.”

But until the retailer upgraded its order and inventory management systems along with a new e-commerce platform a few years ago, it was unable to handle sudden spikes in online orders, Qaiyum says. And for a retailer that had built its reputation for more than a century on customer service as well as unusual products, being unable to fulfill orders was a tough pill to swallow, he adds.

When the Oprah Winfrey TV show picked the retailer’s Claus Porto soaps as one of Oprah’s favorite things on a Friday a few years back, for example, Smallflower.com had received orders worth tens of thousands of dollars by the following Monday but was able to fulfill only a small percentage of them. “People thought they had bought the items on that Friday, but we had to tell many of them we didn’t have the product,” Qaiyum says. “I hated that we had built our business for over 100 years on customer service, and we couldn’t meet customers’ orders.”

In 2009, Merz began deploying web-based technology from Celerant Technology Corp., starting with inventory management, followed by a new store point-of-sale system and a new e-commerce site. The system also processes orders that Merz places with its suppliers, providing immediate electronic updates on what has arrived and what’s still on order. It still fulfills orders from its one warehouse, which is connected to one of its two stores, as well as from its stores when necessary.

Now, when hot items begin to sell out, Merz can more easily identify what inventory is available for fulfillment in its warehouse as well as in its stores, Qaiyum says. If available inventory runs out and customers start placing them on back-order, the Celerant system can automatically indicate online the expected wait time for fulfillment. The web site may indicate that delivery can be expected within 10 days, for example.

At the same time, Merz is now able to handle up to 1,000 or more orders a day during peak periods, compared with only 200 orders a day a few years ago before the Celerant deployment, Qaiyum says.

The system also produces reports for Merz employees to show how long customer orders may take for fulfillment, which allows customer service reps to e-mail customers to notify them of unusually long wait periods, such as for the hand-made Dovo razors imported from Germany, Qaiyum says. In that case, reps will tell customers they can sign up for an alert for when a product will become available.

The ability to let customers know when products will be delivered or become available for ordering helps to maintain the retailer’s reputation for customer service while also making it less likely customers will seek the same product elsewhere, Qaiyum says.

Although he declines to tie direct performance figures to the new order and inventory management systems, Qaiyum says the new technology has helped to increase sales from repeat customers while producing positive feedback from shoppers. And while its store sales have been growing at 5-10% in recent years, web sales have been increasing 15-20% or more, he says.